eDiscovery Check-in: How Courts and Practitioners are Handling the 2015 FRCP Amendments

While many rules were updated in December 2015, such as Rule 34, which now requires specificity in objections to discovery requests instead of the boilerplate objections, from an eDiscovery perspective, the rules that were most affected by the Federal Rules of Civil Procedure (FRCP) revisions were Rule 26(b)(1), which relates to discovery proportionality and relevance, and Rule 37(e), which relates to the failure to preserve electronically stored information (ESI). The increasing expense of preserving, collecting, reviewing and producing ESI provided the impetus for many of the recent revisions.

Rule 26(b)(1) Changes

While many courts have considered proportionality in discovery decisions, it has not been as explicitly outlined in the rules until the December 2015 changes. In addition to addressing proportionality, the changes to 26(b)(1) removed much of the broad language, such as the sentence: “For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action.” In addition, one of the most significant changes to Rule 26(b)(1) was the removal of the provision that inadmissible evidence was discoverable if it “appears reasonably calculated to lead to the discovery of admissible evidence.”

Rule 37(e) Changes

Prior to the change of 37(e), U.S. District Courts were divided on how to address sanctions and when they were appropriate. Some found that mere “negligence” was enough, while others looked for “intentionality” and/or “bad faith” as the trigger. The result was confusion and over-preserving, which caused mainly large corporations to beg for more consistency. The intent of the changes to 37(e) was to create a uniform standard for imposing sanctions when a party failed to preserve. The rule was modified so that severe sanctions should only be imposed in the most extreme situations when a party acts willfully to avoid preserving ESI.

The revised rule, now called “Failure to Preserve Electronically Stored Information”, states that if data is lost “because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery,” the court has two options: (1) Upon finding prejudice to another party from loss of the information, the court may order measures no greater than necessary to cure the prejudice, or (2) Only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation, the court may:

Presume that the lost information was unfavorable to the party;

Instruct the jury that it may or must presume the information was unfavorable to the party; or

Dismiss the action or enter a default judgment.

Response to 26(b)(1) Changes

When the changes to 26(b)(1) first emerged and were being discussed, many believed the result would be a sea change in the courts, leading them to rein in the perceived excesses of the discovery process. Others felt that not much would change since the idea of proportionality was already being addressed in most courts. On one end of the spectrum is Bentley v. Highlands Hosp. Corp., 2016 U.S. Dist. LEXIS 23539 (E.D. Ky. Feb. 23, 2016) in which the court provided clear guidance on the parameters of relevance and proportionality in discovery. On the other end of the spectrum, the court in Wit v. United Behavioral Health (Case No. 14-cv-02346 JCS (N.D. Cal. Oct. 12, 2016)) cited an outdated 1978 Supreme Court opinion, Oppenheimer Fund v. Sanders, 437 U.S. 340 which supports a broad interpretation of “relevance”.

Generally, what looks like is happening in courts seems to be what was intended: a change in mindset related to discovery. For example, in Gilead Scis., 2016 WL 146574, the court touched on this new mindset: “No longer is it good enough to hope that the information sought might lead to the discovery of admissible evidence. In fact, the old language to that effect is gone. Instead, a party seeking discovery of relevant, non-privileged information must show, before anything else, that the discovery sought is proportional to the needs of the case.” The consensus seems to be that, while some courts already considered limitations and proportionality in discovery – and therefore would not be significantly affected by the changes – the revised rule hopes to move all courts in a unified direction with regard to this new discovery mindset.

Response to 37(e) Changes

Courts have struggled more with the rule changes to 37(e) than those to Rule 26. One issue that courts are struggling with consistently applying the meaning of “reasonable steps” to preserve ESI. The different types, complications and nuances of ESI have caused the courts to apply different standards under different circumstances. For example, in Best Payphones, Inc. v. City of New York, et al, No. 1:2001cv03934 – Document 295 (E.D.N.Y. 2016), the court had to deal with a variety of formats which required different analyses since each format had different definitions of “reasonable steps” for preservation.

In addition, there seems to be a trend in which courts are requiring stronger evidence that, when claimed, ESI is indeed missing, as in FiTeq Inc. v. Venture Corp., No. 13-cv-01946-BLF, 2016 WL 1701794 (N.D. Cal. Apr. 28, 2016). Finally, there seems to be two simultaneous trends that are interacting and complicating decisions for courts: the idea that reasonable steps should be taken to preserve ESI (and the definition thereof) and the fact that courts and litigants continue to learn and become aware of the complex nature of ESI. For this reason, it seems that courts will continue to evolve on the issue of ESI preservation to achieve fairness to the parties.

What Should Practitioners Do?

As a result of the 26(b)(1) changes, practitioners should consider a couple of shifts in focus. First, attorneys should review the complaint with an eye towards phased or iterative discovery. This method starts small, with the most critical issues in question, and grows as information is discovered and produced to and received from opposing parties. This method helps drive relevance to the main issues and has the added benefit of saving resources.

Second, early conversations with clients will help determine where ESI is located and how much effort and resources will be required to review and produce any relevant ESI. Can the number of custodians be limited? Do we need all their ESI or would electronic communications suffice? What are the costs related to the production of that ESI and will they produce the most relevant results?

Since the impacts of the changes to Rule 37(e) are still being worked out in the courts, courts and litigants are still learning the complexities of ESI preservation and no broad consensus exists on what “reasonable steps” means, caution is still the prudent approach. The hope is that the Rule 37(e) revisions will, through the courts, settle into a few general guidelines and precedent that will provide more consistency and prevent the over-preservation of ESI, but we are not there yet.

Dr. Cobb currently serves as Partner at One Source Discovery, a local, full service eDiscovery firm. He developed the strict procedures used during forensic collections and analysis to ensure accuracy, verifiability and repeatability. Dr. Cobb is the creator of BlackBox, the patented remote forensic collection software tool. Prior to his position at One Source Discovery, he was the founder and President/CEO of AC Forensics and Assistant Professor at the University of Louisville. Dr. Cobb has served as a consultant on hundreds of Electronic Discovery matters, provided expert testimony on various Computer Forensics matters in Federal and State Courts, given several talks and CLE’s related to electronic discovery, and published numerous technology journal articles.